While big names in the restaurant industry look to automation and lower price points, Jack in the Box, the self-proclaimed out-of-the-box choice for fast food, is looking to a better guest experience to win the fast food wars.
Jack in the Box CEO Lenny Comma, speaking with Restaurant Insider at May’s Restaurant Industry Conference, explains that he bets on a strategy that makes guests feel welcome. “It’s our super craveable food with no judgment. We are a place for someone like you,” he says. “Come one, come all, we love you all and we don’t care, whatever form, shape or brain-space you’re in; just show up, we’ve got what you need.”
Still, Comma and his West Coast fast food brand, along with other quick-service restaurants, are facing a future of automation and animatronics, and a fight to be the first to implement–and the best–while still providing value.
The QSR value wars have long been fraught with battles. When McDonald’s launched their Dollar Menu, Taco Bell was prompted to roll out Dollar Cravings, and Del Taco adding more items to their Buck & Under offerings. So it’s no surprise that NPD Group found that value menu traffic was up 10 percent for the first quarter of 2018, with value menu sales increasing 13 percent.
While Jack in the Box launched a limited time offer with products ranging from $1 to $5 in January, Comma says he doesn’t want to engage in low margin value wars as a rule, since he believes the value-seeking guests also come with zero brand loyalty.
“Everyone criticizes us for not chasing value but again if you look at the EBITDA we generate and the margins we generate, OK, we’re not getting the comps from the last couple quarters that people have seen that at up there with McDonald’s, but we’re also not eroding our brand equity for the long term and we are holding our own financially,” Comma says. “Our model is really damn strong.”
While he feels that this war was right for many of the giants of the industry, Comma says that Jack in the Box doesn’t have the size to go blow for blow, and that they would instead find more creative ways to grab their market share.
The automation wars are also led by the industry giants like McDonald’s, Wendy’s and Burger King, as the demand for higher wages has pushed companies toward robotic solutions to lower labor costs.
Although Comma had recently publicly stated that Jack in the Box was looking into automation, he has determined that not only does he not like the kiosks’ return on investment, he wouldn’t eliminate a human job to add a robot. If Jack in the Box did engage in automation, he says, it would be for increasing productivity or enhancing the guest experience, rather than for labor reduction.
“If you look at the history of our company, we have endless stories of people who went from first-time workers or immigrants to multi-millionaires, franchisees, directors of operations,” he says. “Only our industry, retail, and hospitality are providing those types of opportunities”
Comma doesn’t believe guests would be receptive to automation overhauling the labor market.
“If there was a massive acceleration of automation right now, it would be a PR nightmare. I don’t think the consumer is ready for it. They don’t want to feel like everyone is being thrown out of their jobs because of automation. So everyone needs to just wade in the water here,” he says. “From a public policy standpoint, our government needs to work hand-in-hand with us as one of the biggest providers of first-time job opportunities for unskilled workers.”
Comma says he wishes the new tax bill would have had something similar to the work opportunity tax credit that grants him a credit for employing individuals living below the poverty line.
“It would have flown in the face of rapid acceleration of automation and replacement of workers,” Comma says. “Regardless of what the CEOs say, the lower tax rates have immediately led to a significant windfall for Wall Street in the form of additional share repurchases and/or dividends. That’s a fact. I feel like if that locking mechanism had been there now, it would have helped balance this whole automation and the impact to employees over the long term.”
Comma does note that an aversion to automation doesn’t mean the team is not actively looking to bring more technology into the dining room. Jack in the Box is looking to win both the tech and value wars by building a better experience, something that could include something as space-age as virtual reality immersion.
“What if you came into a Jack in the Box and were able to eat your burger virtually on the beaches of Fiji, or in the middle of Times Square?” he asks.
Only time will tell.